U.K. pharma pushes back against value-based pricing

Europe's austerity push has put the squeeze on drugmakers, that's no secret. Not surprisingly, troubled Greece, Spain and Italy have all gone after drug spending as a way to dig out of their financial holes. But so have the healthier countries, including AAA-rated Germany and the U.K.

It's not for lack of pushback from pharma. Eli Lilly ($LLY) CEO John Lechleiter went on a lobbying tour of Germany, aiming to persuade officials there that current price cuts--and forthcoming value-based pricing on new drugs--will end up hurting their country in the end, by discouraging pharma investment and innovation. And no doubt plenty of arm-twisting, from plenty of industry types, has been going on behind the scenes all over Europe.

The latest protest from pricing-pressured drugmakers comes from the U.K., where the CEO of the Association of the British Pharmaceutical Industry said new value-based pricing set to take effect in 2014 won't do anything to "encourage innovation" in the industry.

Keep the current Pharmaceutical Price Regulation Scheme, which is a profit-controlled model, ABPI's Stephen Whitehead told the Telegraph. Add elements of value-based pricing to the PPRS, by all means, he said. But don't switch altogether. "We would like there to be a single holistic scheme that is low on bureaucracy, efficient, patient-focused and reflects an element of freedom of pricing," Whitehead said.

It's those last three words that mean most. Losing pricing freedom right and left, pharma would like to hang onto it wherever it can. Unfortunately for the industry, however, the U.K. government has its own aims. "We need a much closer link between the price the NHS pays and the value that a new medicine delivers," a spokesman told the Telegraph.

- read the Telegraph piece